Inter-Korean Businesses Likely to Be Suspended

Hyundai Motor Co. announced that it will not participate in inter-Korean businesses.

Inter-Korean businesses are likely to drift for the time being as major creditor banks object to the participation of subsidiaries that were under the control of Chung Mong-hun, the late-chairman of Hyundai Asan, and their pursuit of inter-Korean projects. Hyundai Heavy Industries has also made clear that it cannot take them over.

“Hyundai Motor Chairman Chung Mong-gu said before mourners that his company will not join the inter-Korean projects,” said Lee Yong Hun, a senior official of the automaker Tuesday.

“The matter should be decided according to a thorough market economy theory,” Lee explained. “If Hyundai Motors takes responsibility for inter-Korean businesses, it will face hardships due to the possible outflow of foreign investors, who control more than a 46 percent stake in our company.”

An official of Hyundai Heavy Industries, which was separated from the Hyundai Group in February last year, also denied the possibility of continuing the inter-Korean projects, saying, “We will only focus on our major businesses under the control of the official CEO.”

Korea Exchange Bank, the major creditor bank of the Hyundai Group, decided not to allow any forms of participation of the Hyundai subsidiaries in inter-Korean economic projects.

“Since Hyundai Asan has no debt, banks cannot talk about their business activities,” said a senior official of the bank. “But if other subsidiaries, such as Hyundai Merchant Marine and Hyundai Corporation, decided to take part in the inter-Korean businesses, we would definitely call in loans,” he added.

Hyundai Merchant Marine rolled over its debt in December last year, promising creditors that it would give up its inter-Korean business projects by 2004. Hyundai Corporation is expected to be separated from the group later this month, as creditors decided to take control of the management along with the company.

Other subsidiaries, including Hyundai Elevator, Hyundai Logistics, Hyundai Securities, and Hyundai Autonet, are incapable of taking over the inter-Korean businesses or of selling their management rights.

Hyundai Asan cannot continue its inter-Korean projects without outside money since its capital, which amounts to 450 billion won, is completely impaired. The company, however, said that the late-chairman wished for the Mt. Geumgang tour to be continued. “We asked North Korea to continue the Mt. Geumgang tour,” it said.

Experts predict that either the government or public corporations, rather than private companies, is likely to take the lead in all inter-Koran business projects in the future.

Chi-Young Shin Na-Yeon Lee higgledy@donga.com larosa@donga.com